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Borrowing Forex loans
A large segment of the society is quite skeptic about borrowing forex loan for trading as there is a great deal of risk associated with it. Every year, billions of dollars are transacted for forex trading. And according to many experts, investing on foreign exchange is better than investing on futures and options. So, forex loans are not exactly something scary. It is true that risk is associated with it, but then risk is there in any business. And what more, these days, service is no longer a safe bait because you can never know when can you too receive a pink slip.
About Forex Loans
There are specific loans that are given out to trade forex. These are called forex loans or forex Currency Exchange. Gradually, many banks have revised their regulations for these loans. If the bank you trust does not comply with forex loans, you can start your business with personal loans too. When a forex is loaned, you actually loan the exchange. Also, the money is not said to have been loaned but the bill. This bill can be sold to meet the payments of obligations in home. In case of forex loans, as per the general norms, security or the collateral stays with the money lender.
Who Can Qualify for Forex Loans
The eligibility to apply for forex loans may differ from a country to another. For example, in China, a State or Collectively owned undertaking and a State owned organization if faces shortage of foreign exchange to carry on the trade or business that requires foreign currency can apply for it.
As an individual if you are applying for forex loans, you need to be a legal person who exercises accounting independently and have proper documents from relevant authorities to use foreign exchange. You must provide proofs to confirm that you have the ability to pay back the borrowed amount. You should also have a clean and substantial credit history to confirm this.
Short term Forex Loans
The short term forex loans can be used as working capital for enterprises of construction, over seas market, real estate, export services and for purchase of real estate construction and development equipment. This capital can also be used as working capital to supply building materials as well as equipment of advanced technology for its import-export business. The tenure of short term forex loans cannot exceed two years. The tenure starts with the day loan was paid to the borrower to the day amount is paid back to the bank along with the interest. However, for special cases, borrowers can apply for increasing the tenure and it is subjected to the approval from bank's Head Office. The rate of interest incurred on the forex loans is decided by the country's central bank and Foreign Exchange bureau. The rate of interest is fixed and incurred quarterly. When all the requirements are met and documents are submitted, a loan account is opened with the bank. Terms are agreed by the money lender, borrower and the guarantor. Upon this, agreement of Foreign Exchange Loan is signed and the amount is deposited at the loan account.